TAX ALERT: Update on Tax Reform
Tax reform continues to be at center stage in Congress, as the Senate unveiled its plan for tax reform, while the House Ways and Means Committee approved an amended version of the Tax Cuts and Jobs Act (“House Bill”) that was released last week. The Senate’s November 9, 2017 version of the Tax Cuts and Jobs Act (“Senate Proposal”) contains several similarities and differences from the House Bill.
From an individual tax perspective, similarities between the two Congressional tax plans include: (1) preservation of retirement savings plans (i.e., 401(k)s, IRAs, etc.), although IRA recharacterizations under both plans would be eliminated; (2) elimination of the alternative minimum tax (“AMT”) and the individual benefit for personal exemptions; and (3) retention of the itemized deduction for charitable donations.
From a corporate tax perspective, similarities include: (1) elimination of the AMT and the Internal Revenue Code (“IRC”) Sec. 199 Domestic Production Activities Deduction; (2) restricted meal and fringe benefit related deductions; and (3) limitation of IRC Sec. 1031 like-kind exchanges to real estate property. Additionally, both branches of Congress have addressed or will address the tax rate benefits associated with carried interests.
The charts below compare many of the key provisions of the House and Senate proposals for tax reform:
As mentioned above, the coming weeks should be exciting as Congress and the Executive Branch are pushing to have the tax reform in place during 2017. Taxpayers can expect heavy debate and we at Sax promise to stay on top of this to assist in your short-term and long-term planning needs.
At Sax LLP, we are committed to being at the forefront of this legislation and will continue to provide updates as they emerge. Should you have any questions or concerns in the interim, please do not hesitate to contact the Sax Tax Department here.